Gas-tax cut won't be as large
California drivers are still in for a tax break on a regular gallon of gas this summer, but it’s not going to be as large as originally proposed.
The state Board of Equalization voted unanimously Tuesday to lower the per-gallon excise tax on a regular gallon of gas from 36 cents to 30 cents. The new rate is effective July 1, the start of the next fiscal year. The board went against its staff recommendation to lower the excise tax to 28.5 cents per gallon, unveiled about two weeks ago.
The board has been charged with setting the excise tax rate since 2010, when the state switched to what’s called the fuel-tax swap. The complex system nearly doubled the excise tax but lowered the sales tax. It allowed the state to take some money from fixing roads and use it for general spending.
The board adjusts excise tax annually based on projections of consumption and price. The system is supposed to raise the same amount of tax revenue as the pre-2010 system, which has led to changes in the excise tax rate each year.
On Tuesday in San Diego, a gallon of regular gasoline cost $3.07, up about 60 cents from a month ago, the Auto Club reports. In a statement, Board of Equalization Member Fiona Ma said the volatility of gas prices made the board reluctant to do the full 7.5 cent cut -— that would mean a larger increase next year should gas prices continue to rise. Instead, the board decided to use a number closer to Gov. Jerry Brown’s budget proposal.
“The increases we have seen over the last few weeks have really driven home the fact that it’s very difficult to predict what gas prices will be next month, let alone next year,” Ma said. “Today’s vote by the Board of Equalization was the most responsible course of action.”
Ma said she is urging the state legislature and governor to get rid of the fuel tax swap, since the budget deficit it was created to help close no longer exists. She said she and her colleagues are concerned over continuing to have to make “Magic 8 Ball” predictions on gas prices.
California drivers pay among the highest gas taxes in the nation, through a series of federal, state, and local taxes and fees, including sales tax. The levies total 63.79 cents per gallon, according to the American Petroleum Institute.
With the cut announced Tuesday, a driver who travels 15,000 miles a year at 20 miles per gallon and buys 750 gallons of gas will save $45 per year from the excise-tax cut. Had the original plan stood, that same driver would have pocketed an extra $11.25.
The state board also voted 3-2 to raise the excise tax on a gallon of diesel gas from 11 cents to 13 cents per gallon.